REPORT: Millions of Migrant Workers from South Asia Are Paying the Costs of their Own Recruitment to Work in the Arabian Gulf

NYU study finds that corporate practices encourage an already-exploitative recruitment system, leading to extreme indebtedness for workers and increased vulnerability to abuse

NEW YORK – A new study from the NYU Stern Center for Business and Human Rights finds that construction companies operating in the Arabian Gulf are able to recruit millions of low- wage migrant workers without incurring the costs of the recruitment process. Instead, in this highly irregular system, most workers themselves are paying for their own recruitment – and much more – before they depart their home countries. These recruitment “fees” may be equal to or more than a year’s salary – which these low-wage laborers must work to pay back once they begin their construction jobs in the Gulf.

In order to pay these fees, most migrant workers must take out significant high-interest loans, which can take a year or more to repay. In addition to the harsh financial burden this places on these workers and their families, these loans can lead to long-term indebtedness, limiting their flexibility to change jobs or to move home or to another country. The beneficiaries of this system include layers of recruiters both in South Asia and the Gulf, and construction firms and their clients.

“Recruitment is not free,” said Segall, a Policy Associate at the NYU Stern Center for Business and Human Rights. “It costs money to find and interview workers, to test their skills, to process their visas, and to pay for their travel from South Asia. But these are costs that employing companies and their clients – which benefit from inexpensive labor – should be incurring, not the workers themselves.”

Many South Asian workers seek employment in the Gulf-based construction industry because of the limited economic opportunities that exist in their home countries. Today, there are 25 million migrant workers in the Arabian Gulf, including more than 10 million construction workers. Foreign workers comprise about half of the region’s total population.

However, the two Gulf states most closely examined in the report – Qatar and the United Arab Emirates – have failed to provide adequate protections for this influx of outsiders, including by nurturing a culture of permissiveness around illegal visa-selling schemes originating in their countries. Other Gulf governments are doing much the same. The report finds that in practice, workers are actually paying several times the real cost of recruitment, due to layers of recruitment agents who are working to facilitate migration, and to mark-ups applied to fees associated with virtually any service these agents provide. The NYU Stern Center concludes that in the relatively rare cases when construction companies do in fact pay their recruiters, some of these agents – who face little oversight from authorities – are charging workers anyway.

“Migration has the potential to fulfill the promise of decent work, increased pay and better lives for hundreds of thousands of people with limited economic prospects,” said Sarah Labowitz, co-founder of the NYU Stern Center for Business and Human Rights. “But instead of providing workers with such opportunity, industry practices contribute to workers entering into extreme debt, exacerbating any abuses that these migrants are likely to face once they arrive in the Gulf.”

The report concludes that breaking this cycle of abuse will require a fundamental shift in how construction firms and their Gulf-based clients structure project bids so that they account and pay for all recruitment costs. The Center also calls on Gulf governments to enforce their laws against the sale of visas. It also calls on migrant-sending countries to ban the payment of these fees and to “license, legalize, and regulate” complex networks of unregistered recruitment agents operating on their soil.

In the report, the Center recommends a model of shared responsibility between construction and engineering firms, their clients and subcontractors, and governments in the Gulf and South Asia. The Center proposes these key actors together develop a common plan of action in a transparent manner to assess the scope of the problem, determine the costs of addressing it, and formulate an equitable plan to share these costs.

“The payment of large fees by migrant workers in the Arabian Gulf is not inevitable,” Segall said. “Our hope is that this report will help spur much-needed action by deepening understanding of the recruitment business model, and encouraging companies, their clients, governments, and civil society to explore and pursue reform.”